In a deepening dispute over who controls Federal City in Algiers, the nonprofit corporation created to steer the conversion of the former Naval Support Activity into a mixed-use development says it is broke and that its dire financial state could cause a temporary work stoppage. The New Orleans Federal Alliance, or NOFA, is an apolitical entity that has relied on state and local support to finance its operations and pay its legal and consulting fees until the campus gains commercial tenants who pay rent for space in the now-closed military base. The alliance essentially pays the bills from $150 million in state money for contractors on the project and oversees the work of the master development team it selected, HRI/ECC.

Susan Poag, The Times-PicayuneMore than 300 people attended the dedication of the Joseph J. McCarthy Building for the Marine Forces Reserve Facility in June, part of Federal City in Algiers. The Algiers Development District and New Orleans Federal Alliance are battling for control of the Federal City project.

In addition to providing the $150 million used to build the new headquarters for Marine Forces Reserve and amenities at Federal City, the state has fulfilled its financial obligations to the alliance, having given the nonprofit about $5.8 million since 2008, Louisiana's economic development Secretary Stephen Moret said.

But the local entity, the Algiers Development District board that is comprised of politicians or their appointees, is positioning itself to wrest control of the project from the alliance and has held back money from the nonprofit, despite a 2008 funding agreement.

State Rep. Jeff Arnold, D-Algiers, who chairs the Algiers board, said his board already has given NOFA $5 million in recent years and is hesitant to give more money. Acknowledging the board's 2008 commitment, Arnold said it was "not automatic" and the board is dissatisfied with the alliance's work and use of money primarily on salaries.

"We have to proceed as if, as of today, they (NOFA) no longer exist, or no longer operates," Arnold said Wednesday after his board voted to give itself more authority over Federal City business.

The Algiers board receives sales-tax revenue generated by Walmart and neighboring businesses on Behrman Highway, and the state matches it up to $2 million per year. The Algiers board must spend the money on specific projects, with New Orleans City Council approval. Federal City has been the main recipient of that money.

Moret said that, per the state's agreements with Federal City, the Algiers board is able to oversee the project if the alliance cannot. He said NOFA and the Algiers board should find a solution.

Alliance Chairman Bill Ryan said in a letter recently his board would be broke Oct. 5 -- and that work at Federal City could stop -- if it did not receive financial help. Retired Marine Corps Maj. Gen. David Mize, who is NOFA's president and is paid $215,000 annually, said the alliance was seeking "bridge" money to keep it afloat until a funding solution could be found.

NOFA says the cash crunch comes at a critical juncture, as the board is involved in time-sensitive projects that could collapse if the alliance dissolves. With a NOFA-owned parking garage and auditorium at the campus using $2.4 million in new market tax credits that NOFA secured, alliance officials say it cannot be detached from the project.

In the meantime, Mize, Arnold and New Orleans Councilwoman-at-large Jackie Clarkson, who is a member of the NOFA board, said Mayor Mitch Landrieu has sought a meeting with NOFA and the Algiers board to find a solution. At Landrieu's request, the Algiers board postponed voting on its 2012 budget, which takes effect Jan. 1.

Deputy Mayor Judy Reese Morse, who serves as Landrieu's appointee on the Algiers board, said it is "crucial" that both boards "engage in as much constructive dialogue as possible to ensure that ongoing operations critical to the success of Federal City is addressed."

"This project is a major economic development driver for New Orleans and the state," Morse said. "Every effort should be made by both boards to present a reasonable and thoughtful path forward."

Construction continued at Federal City on Friday. Eddie Boettner, a vice president for developer partner HRI, said he knew nothing about a shutdown.

For months, Arnold has publicly criticized NOFA, citing duplicative expenses it and the ADD share. The Algiers board potentially is in line to own nearly 200 acres of Navy land associated with the shuttered base.

Toward that end, the Algiers board in June spent $295,000 on a contract with La Pilica LLC to help prepare the board to take ownership of the land. It also sought a recommendation on how best to govern Federal City. As expected, the consultants said last week that the two most viable options were to let the alliance dissolve and the Algiers board take over, or allow NOFA to become the ADD's "advisory board."